IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION   

CIVIL APPEAL NO. 4905   OF 2010 (Arising out of SLP(C) No.7084 of 2007)

 Kandla Port Trust ……Appellant

Versus

Goodrich Maritime Pvt. Ltd. and another ……Respondents

WITH  

CIVIL APPEAL NO.4951  OF 2010 (Arising out of SLP(C) No.9730 of 2007)

J U D G M E N T

G.S. Singhvi, J.

1. Leave granted.

2. These appeals are directed against order dated 27.11.2006 passed by  

the Division Bench of Gujarat  High Court whereby it  allowed the letters  

patent  appeals  preferred by respondent  No.1 and quashed the demand of  

container storage charges and ground rent.

3. Respondent No.1 is said to be an agent of international shipping line  

which is engaged in the business of carrying consignments in containers to  

various destinations.  In 2004, respondent No.1 transported goods belonging  

to different consignees in eight containers under 3 bills of lading in which  

the final place of destination was shown as Kandla Port. The description of  

the goods as given in the bills of lading was “Heavy Metal Scrap” (seven  

containers) and Hollow Section Tubes (eighth container), though, in fact, all  

the containers contained war material/explosives such as artillery shells, etc.  

The containers were shipped to Kandla Port on the vessel of M.V. Orient  

Patriot and were off-loaded in the months of October and December, 2004.   

4. Since the goods were not as per the description given in the bills of  

lading, the same were confiscated by the Customs Department. Respondent  

No.1 made representations to the appellant for release of the containers after  

de-stuffing the goods.  The appellant sent communications to Superintendent  

of  Police,  Bhuj  and  General  Staff  Officer,  11  Infantry  Division,  APO,  

Ahmedabad to take possession of the war material/explosives but both the  

authorities declined to do so by citing the grounds of lack of power to do so  

or non availability of resources.  On 6.6.2006, the appellant issued bills to  

respondent  No.1  for  levy  of  container  storage  charges  and  ground  rent.  

Respondent  No.1  challenged  the  same  in  Special  Civil  Application  

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Nos.17403/2006  and  17404/2006.   The  learned  Single  Judge  summarily  

dismissed both the special civil applications by relying upon an order passed  

by the Division Bench in Letters Patent Appeal No.104 of 2000, wherein it  

was observed:

“…  It  is  required  to  be  noted  that  the  goods  arrived  in  containers which were loaded in the ship by the exporter.  It  was the duty of the importer to take the delivery of cargo in the  container.  There is no contract between the petitioner-appellant  and the shipping company or the Kandla Port Trust.  In absence  of  this,  in  our  opinion,  the  learned  Single  Judge  has  rightly  arrived at a conclusion that the dispute involved would require  recording of evidence and cannot be summarily executed upon  exercise of writ jurisdiction of this court.  In our opinion, the  learned  Single  Judge  has  rightly  observed  that  the  proper  remedy for the petitioner would be to approach the Civil  Court  for claim of containers. …”

5. Respondent  No.1  questioned  the  correctness  of  the  order  of  the  

learned Single  Judge by filing letters  patent  appeals.   In  response to  the  

notice issued by the Division Bench, separate counter affidavits were filed  

on behalf of the appellant in both the appeals.  For the sake of reference,  

paragraphs 4 and 5 of the counter affidavit filed by Shri P. Suresh Babu,  

Deputy  Traffic  Manager,  Kandla  Port  Trust  in  Letters  Patent  Appeal  

No.1107/2006 are reproduced below:-

“4. With reference to para-2(a) of the LPA, it is submitted  that  the  learned  Single  Judge  has  passed  the  order  after  considering the order dated 05.04.2000 passed by this Hon’ble  Court in LPA No. 104/2000 and also the order passed by the  Hon’ble the Supreme Court in Civil Appeal No.4537/2001.  It  

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is  submitted  that  so  far  as  the  facts  of  the  present  case  are  concerned, on merits, they are different and, therefore, cannot  be intermingled in this case.  However, as in both the cases i.e.  before the Hon’ble Single Judge in the present case and before  the Hon’ble Division Bench, issue of disputed questions of fact  is involved and, therefore, on that count, the petition is rightly  rejected  by  the  learned  Single  Judge  after  relying  upon  the  above-referred  decision.   However,  in  the  present,  the  consignee/importer  of  the  involved  containers  have  not  abandoned and, therefore, the learned Single Judge has rightly  appreciated the facts of the case on which the Hon’ble Apex  Court  passed  the  order  dated  24.7.2001.   In  that  case,  the  consignees  of  the  cargo  contained  in  the  container  issued  a  letter abandoning their cargo.  Here in the present case, no such  letter of abandonment has been issued by the consignees.  In  that  view of the matter,  the learned Single Judge has rightly  relied upon and interpreted the TAMP Order No. 120 dated 28th  August,  2000  issued  through  the  Government  Notification  published in Part-III Section 4 of the Gazette of India,  Extra  Ordinary  being  Tariff  Governing  Body  for  all  major  ports.  Therefore, it cannot be said that the learned Single Judge has  ignored the order of the Hon’ble Apex Court.  On the contrary,  the Hon’ble Single Judge has come to the conclusion that the  decision of the Hon’ble Apex Court is in different set of facts  and has no application to the facts of the present case so far as it  involves claim of abandonment of the container for the purpose  of levy of ground rent by the Port Authority.

5. With reference to para 2(b) of the LPA, it is submitted  that  the  learned  Single  Judge  has  considered  the  TAMP  Notification referred to above and the order passed by Hon’ble  Division  Bench  and  Hon’ble  Apex  Court  in  its  proper  perspective.  It is submitted that in the case of order passed by  the  Hon’ble  Supreme  Court  dated  24.7.2001,  the  containers  were  abandoned  by  the  consignees/importers  whereas  in  the  present case, container No. 1 i.e. YMLU 3101356 is lying in  Port as un-cleared container since landing in port area and no  abandonment letter is submitted by the consignee/importer in  the present case.  The appellant requested the port authority to  de-stuff  the  container  by  their  letter  dated  30.9.2004  and  20.7.2005 within the port area for the purpose of auction of the  

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cargo  and  for  that  shown  their  willingness  to  move  the  container  within  the  port  area,  because  the  port  authority  is  supposed to carry out its activity within the port area and not  out side the port area.  Therefore it is clear that the line has not  shown their willingness to move the container outside the port  area to the CWC/CFS-1 and never resume the custody to take  back  the  container  with  cargo  to  the  port  originated,  and  therefore so long as the containers remain on the port land, the  ground rent is chargeable, in absence of the compliance of the  required formalities and in that view of the matter the letters are  not at all abandonment letters, and also not in accordance with  the guideline provided by the TAMP Notification, and clearly  an  eye  wash  and  therefore  Bill  No.244362  dated  6.6.2006  raised for port period i.e. from 3.8.2005 to 31.5.2006 stands in  order  and also  in  line  with  Issue  No.(II)  ii  (a)(b)  of  TAMP  Order dated 28th August, 2000 read with sections 61 and 62 of  the Major Port  Trusts  Act,  1963 (MPT Act for short)  which  provides Port Trust to start auction proceedings after expiry of  60/75 days in view of both sections i.e. MPT Act and TAMP  Circular and it is not mandatory on the part of the Port Trust to  auction the container within particular time and in such a case  issue  No.(V)  of  TAMP Order  shall  apply  to  shipping  Lines  which read as under:-

ISSUE : (V) Actions to be taken by the Lines, if they want their containers  back before the stipulated period.

CLARIFICTION:- Since the Lines are not the owner of the Cargo,  they cannot  abandon  the  (containerized)  cargo  and  take  back  their  containers,  whenever  required.   Since  the  consignees  are  to  issue  the  letter  of  abandonment  and such  instances  are  very  rare, the lines may look for ways and means to take back their  containers  without  waiting  for  the  expiry  of  the  stipulated  period when only the Port Trust can release the containers after  arranging for auction of the cargo.  The Lines have two options.  They  can  take  back  the  (loaded)  containers  to  the  Port  of  Origin.   Alternatively,  the  Lines  can  resume  custody  of  the  containers and move such containers to any outside private CFS  and  arrange  for  de-stuffing  of  cargo  before  taking  back  the  

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empty container.  (In such cases, the responsibilities of the Port  Trust  as  a  “bailee”  will  cease  as  soon  as  the  Line  resumes  custody  of  the  containers)  there  are  many  approved  private  CFS’s available in the vicinity of a Port, and as per the contract  carriage of goods a carrier  can also dispose of  the goods by  auction under certain circumstances.  That being so, the lines  need not depend only on the ports to take action for release of  the containers.”

Annexed  hereto  and  marked  as  ANNEXURE:  “R-1” is  the  copy of the aforesaid TAMP Order dated 28th August, 2000.

It  is submitted that  based on the above clarification on Issue  No.(V)  of  the  TAMP Order,  the  KPT used  to  issue  request  letters  to  concerned  Line  Agent  requesting  to  de-stuff  long  dwell  containers  (un-cleared  containers)  and  release  the  empties.  It is also further requested to de-stuff the container in  the CWS-CFS and collect the empties, after complying with the  required  formalities  as  per  TAMP  Order  dated  19.7.2000.  However, in the present case, it seems that the duties on the part  of  the  Line  Agent  are  not  performed  timely  and  on  getting  pressure from their principal, the faults of their own are thrown  on Port Trust.  In that view of the matter, it is submitted that  Bill  No.  244362  dated  6.6.2006  issued  on  Line  Agent  is  in  order and is also in consonance with the provisions of the MPT  Act.”

6. The Division Bench did not avert to the counter affidavits filed on  

behalf  of  the  appellant  and  allowed  the  appeals  by  simply  making  a  

reference to the order  passed by this  Court  dated July 24,  2001 in  Civil  

Appeal  No.4537 of 2001 –  Kutch Shipping Agency Private Limited v.  

Board of Trustees,  Kandla Port Trust and observing that there was no  

reasonable basis for levy of container storage charges or ground rent because  

letter  addressed by respondent No.1 to the Traffic  Manager,  Kandla Port  

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Trust for permission to remove the containers to de-stuff the cargo was not  

attended by the concerned authority.

7. Shri P.H. Parekh, learned senior counsel appearing for the appellant  

relied upon Sections 48, 49, 59, 61 and 62 of Major Port Trusts Act, 1963  

(for short, ‘the 1963 Act’), Sections 11, 111(d) and 112 of the Customs Act,  

1962  and  orders  dated  10.11.1999  and  19.7.2000  issued  by  the  Tariff  

Authority for Major Port Trusts and argued that the Division Bench of the  

High Court committed serious error by quashing the demand of container  

storage  charges  and  ground  rent  by  relying  upon  order  dated  24.7.2001  

passed by this Court in Civil Appeal No. 4537 of 2001 –  Kutch Shipping  

Agency Private Limited v. Board of Trustees, Kandla Port Trust ignoring  

that the containers were confiscated by the Customs officers on the ground  

that  in  the  garb  of  Heavy  Metal  Scrap  and  Hollow  Section  Tubes,  the  

consignors  and  consignees  had  tried  to  smuggle  used  and  unused  

ammunitions in the country.   Learned senior counsel submitted that there is  

no provision in the 1963 Act under which the appellant  can de-stuff  the  

goods  which  are  seized/confiscated  by  the  Customs  authorities  and,  

therefore,  respondent  No.1  cannot  take  advantage  of  the  fact  that  

representations  made  by  it  for  release  of  containers  after  de-stuffing  the  

goods were not entertained.

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8. Learned counsel for respondent No.1 supported the impugned order  

and argued that the Division Bench of the High Court rightly quashed the  

demand for containers storage charges and ground rent because the appellant  

failed to take action for release of containers within a reasonable time after  

de-stuffing the goods.  Learned counsel emphasized that respondent No.1  

cannot be blamed for attempted import of war material/explosives because  

its functionaries had no knowledge about the clandestine operation, if any,  

carried out by the consignors and consignees.  

9. We have considered the respective submissions and gone through the  

relevant statutory provisions as also the orders issued by the Tariff Authority  

for Major Port Trusts.  Undisputedly, the special civil applications filed by  

respondent  No.1  were  summarily  dismissed  by  the  learned  Single  Judge  

without  calling  upon  the  appellant  and  respondent  No.2  to  file  counter  

affidavits to admit or controvert the averments contained therein.  This being  

the position, the appellant had a legitimate right to file counter affidavits in  

the  appeals  preferred by respondent  No.1 and the Division Bench of  the  

High Court was duty bound to consider the contents of the counter affidavits  

and then  decide the  issue  relating  to  liability  of  respondent  No.1  to  pay  

container storage charges and ground rent in the backdrop of the fact that the  

containers together with their contents had been confiscated by the Customs  

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Department on the ground that war material/explosives were smuggled in  

the country under the garb of  importing Heavy Metal  Scrap and Hollow  

Section  Tubes.   The  question  whether  rule  of  not  charging  storage  

charges/ground rent for 75 days would apply if the goods are seized and later  

on confiscated by the Customs authorities or any other competent authority  

on the ground that war material/explosives were clandestinely brought in the  

country certainly called for serious consideration, but without examining the  

issue in a correct perspective the Division Bench of the High Court granted  

relief to respondent No.1 only on the ground that representations made by  

the said respondent for release of containers after de-stuffing the goods were  

not  decided.   In  Kutch Shipping Agency Private  Limited v.  Board of  

Trustees, Kandla Port Trust (supra), this Court did not consider a question  

like the one raised in the counter affidavits filed on behalf of the appellant.  

Therefore, the Division Bench was not justified in relying upon the order  

passed in that  case for the purpose of  quashing the demand of container  

storage charges and ground rent.

10. In the result, the appeals are allowed.  The impugned order is set aside  

and the matter is remitted to the High Court for fresh disposal of the letters  

patent appeals in accordance with law.   

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11. Before parting with the case, we consider it appropriate to place on  

record our deep appreciation for the efforts made by the learned Solicitor  

General which made the concerned authorities of the Government of India to  

realize potential threat to the national security due to import of war material  

and explosives in the garb of heavy metal scrap etc., and a comprehensive  

decision has been taken by the Ministry of Home Affairs to ensure strict  

supervision of such imports.   

12. The Registry is directed to send the sealed envelope containing a copy  

of  the  decision  of  the  Government  of  India  to  the  office  of  the  learned  

Solicitor General.

….………………….…J. [G.S. Singhvi]

…..…..………………..J. [Asok Kumar Ganguly]

New Delhi; July 06, 2010.

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